Buying property in a Limited Company VS Personal name

A key question that comes to mind for property investors who are starting a ‘Buy To Let’ business is whether they should own the property in their personal name or in a limited company.

Buying a property through a limited company can offer tax advantages compared with buying personally, particularly for landlords with mortgages or those looking to reinvest their rental profits. However, other costs and your longer-term plans will determine which option is most suitable for you.

The ‘Property Gurus’ of the internet claim that everyone should be using a limited company because of the dreaded Section 24 mortgage cost restrictions.

However, this all depends on your individual circumstances and unfortunately there isn’t a one size fits all answer to this.

With changes to property income tax rates coming into effect from April 2027, choosing the right ownership structure is becoming even more important.

Let’s first start by understanding the implications of Section 24.

What are the implications of section 24? 

Section 24 was gradually introduced from 6 April 2017. It means landlords holding property in their personal name can no longer deduct residential mortgage interest and other qualifying finance costs in full when calculating their taxable rental profits.

Instead, landlords receive a basic-rate tax reduction of 20% on their qualifying finance costs, subject to certain restrictions.

This can have a significant impact on higher-rate and additional-rate taxpayers, as they may pay tax on their rental income without being able to deduct the full cost of their mortgage interest.

For basic-rate taxpayers, the restriction may have less of an impact, as the 20% tax reduction broadly reflects the basic rate of tax. However, individual circumstances and income levels can affect the actual outcome.

This is particularly important when considering the new property income tax rates announced in the Autumn Budget 2026.

What does the Autumn Budget 2026 mean for landlords?

From 6 April 2027, property income tax rates will increase to 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers.

For landlords owning properties personally, this could mean a higher tax bill on their rental income.

The changes make it particularly important to understand how Section 24 mortgage interest restrictions affect your overall tax position and the profit you actually retain.

Considerations if putting a property in your personal name: 

1. Tax allowances and reliefs – Individuals may be entitled to allowances and reliefs that are not available to companies, including the Personal Allowance, Capital Gains Tax annual exempt amount and the £1,000 property income allowance, subject to eligibility. Rent-a-Room Relief may also be available where qualifying furnished accommodation is let in your own home.
2. Transferring existing properties – If you already own properties personally and want to transfer them into a limited company, there could be Capital Gains Tax and Stamp Duty Land Tax implications. Certain reliefs may be available in qualifying circumstances, but the costs and cashflow implications need to be carefully considered before making any changes.
3. Mortgage rates – You can usually expect to have slightly lower interest rates by owning the properties personally
4. Full cash purchase – If you have enough cash to purchase a property outright without needing a mortgage, then Section 24 doesn’t apply to you.

Considerations if putting a property in a Limited Company 

1. Section 24 – Mortgage cost restrictions only apply to individual landlords and not to limited companies, which means the full cost of mortgage interest can be deducted.
2. Corporation tax – Limited companies pay Corporation Tax on their taxable profits, including rental profits and gains from property disposals. The main rate is 25%, with a 19% small profits rate and marginal relief applying between the relevant thresholds. The effective marginal rate in the marginal relief band is 26.5%. Unlike individual landlords, companies are not subject to the new property income tax rates announced for April 2027.
3. Retained profits – If you plan to reinvest rental profits into further property investments, using a limited company may offer tax advantages. After Corporation Tax, profits can be retained within the company to fund future purchases or investment. However, additional personal tax may arise when profits are eventually extracted.
4. Administrative burden – Setting up a limited company is fairly straight forward, however they do bring additional admin requirements with reporting with Companies House and HMRC which therefore usually increases your accountancy fees.
5. Exit strategy – Before putting properties into a limited company, you need to consider your long-term plans. Selling a property through a company may create a Corporation Tax liability on the gain, with further personal tax potentially arising when the proceeds are extracted from the company.

When would you consider going limited? 

While there are benefits to both personal ownership and limited companies, certain situations make a limited company a more suitable option:

High borrowing and higher income – If you have a heavily mortgaged portfolio and pay higher-rate tax, a limited company can let you deduct the full cost of mortgage interest. This can make a real difference compared with holding properties personally under Section 24.

With personal property income tax rates increasing from April 2027, landlords paying higher or additional rates may wish to revisit whether personal ownership remains the most suitable structure for their portfolio.

Reinvesting profits – Limited companies work best if you plan to keep profits in the business rather than drawing them all out. Corporation tax rates on retained profits are lower than personal income tax, giving you more cash to grow your portfolio.

Growth plans – If you’re looking to expand your property business, a limited company can make scaling simpler and provide flexibility in ownership, whether you’re adding partners or planning family involvement.

Long-term exit strategy – To benefit from these points above, holding properties in a company is usually only tax efficient if you plan to keep the portfolio long-term, so careful consideration is essential.

Protecting personal assets – A company structure separates your personal finances from your property business, offering an extra layer of protection.

In short, going limited tends to make sense for property investors who are building a portfolio, reinvesting profits, or looking to plan for the future, rather than those with a single property or who plan to take all profits straight out.

With further tax changes on the horizon, now is a good time to review your property ownership structure. Whether you’re considering your first buy-to-let investment or managing an established portfolio, understanding the tax implications before making decisions could make a significant difference to your long-term returns.

Need further help before you make a decision?

Using a limited company may be the right decision for you. It may not be.

In order to help you make a decision on the best structure for your properties, we can undertake a ‘Bespoke Tax Planning Review’ covering the following:

• A detailed review of your current position
• Understand your plans for the future
• Consider the tax savings vs. cashflow implications of proposed changes made
• Find a balance between tax savings vs. compliance cost of changing your tax structure
• Design a bespoke report based on your circumstances
• Meet with you to discuss the report and provide you with the peace of mind that there are no nasty surprises down the line

Get in touch now to find out more about this service, and for other property specialist advice with me.